Berlinale! BAFTAs! The Golden Globes! The Oscars! February seems to be the most concentrated period in the film calendar, especially the ‘award-winning film’ calendar. But how do all these star-laden and artistically challenging films get funded these days? And why do the plots often include scenes in unlikely countries? Step forward into the spotlight the unsung hero of the film business – the Fiscal Incentive.
In Europe, according to this new report from the Observatoire de l’Audiovisuel Europeene – (stargazers of a different kind) – there are 26 such incentives – eleven tax credits, nine rebates, and six tax shelters – spread across 17 countries. Half of them apply to TV production as well as cinema; three of the twenty-six also apply to funding video games. (Progress! Hooray!). The UK estimates that each £1 spent in the UK on film generates £12 in ‘Gross Value Added’.
If there are Trade or Culture ministers from some of the countries without such incentives reading this blog by the way, the report itself is yours to own here if you have a spare €100. Which you probably do.
Each country is establishing these schemes for roughly the same reasons – to attract film production to their nation, give work to the production/facilities sector, and perhaps be sprinkled by some of that awards stardust. Sometimes cultural and artistic reasons to support film are also advanced, but that seems to be further and further down the small print these days.
In the last year alone, Lithuania, the Former Yugoslav Republic of Macedonia, the Netherlands, and Slovakia have all brought in schemes. Ireland’s new Section 481 scheme started last month. Expect to see one or more of these countries on the credits of a few medium-budget productions in the coming months.The report talks about how employment, heritage awareness, consumer interest, economic growth, exports, tourism and so-called national ‘soft power’ are all reasons for these instruments to be set up. It’s certainly not money for nothing (cue the Dire Straits video below) but it comes at a cost.
To the producer, these incentive schemes seem to be an essential part of film and TV financing without which the film simply wouldn’t be made. And taken for granted by the bigger US based studios – who give the impression of just following the money around Europe, Romania one day, then Prague, then Malta. Even within the USA, California is losing out as ‘Hollywood’ movies are now mostly shot elsewhere. The State of California announced a few months ago that it will triple its tax breaks for entertainment companies doing business in the state, the latest effort to stem a tide of runaway production that has cost it billions in revenue.
So in European countries with attractive incentives, a succession of big-budget productions roll into town, with the ‘financial instrument’ largely paying for the employment of the film professionals of that location. The report calls these ‘portable productions’ , and says:
In mature Western European production sectors in particular – such as the UK, France, and Ireland – there are significant numbers of international portable productions attracted to the market. In many cases, portable productions are sourced from the major US studios, which are important users of production incentives.
The money comes in from government and is spent locally. Britain now has a roaring trade in such movies. Scenes for hundreds of millions’ worth of films are produced in Europe which might otherwise get made somewhere else. Everyone’s a winner, right? I’m not so sure. If this is national funding, it surely needs to work for the country’s own industry, and questions need to be asked. Does it improve the talent base in a country to make it self-sustaining? Does it encourage (smaller) local producers to work at home, or go abroad? Does it enable a country’s creative community to produce the next Big Thing?
The answers are in the Observatory’s densely argued and data-rich study, and I don’t have the film business knowledge to be able to analyse their analysis. The report does say that the government may not particularly care about these issues over pure economic ones
almost all of the incentive structures provide a greater return to the government in tax revenues than they cost to operate, whilst also providing standard trickle-down benefits to the broader economy, also including in areas such as tourism and exports.
I dealt with many creative economy issues when I worked for the BBC on the development of the production sector outside London. How could we incentivise producers? What was the right balance between ‘big producers’ (usually from London) and local/regional ones? Did the regional film & TV sectors gain at all from this strategy? They weren’t issues with simple answers, and the impact or results weren’t immediately apparent.
As with TV, measuring the impact of such a film production strategy purely in financial terms may only tell half the story. Is such film funding just making studio popcorn movies easier to finance? Are we using the resources of crews and talent on cinema that has no particular cultural value? Does it take money away from ‘true cinema’? Or is this all part of a healthy mixed ecology of film production. Comments, info & links all welcome.